Zomato’s rising popularity shows vanishing inequality: SBI EcoWrap

Zomato's rising popularity: The State Bank of India in its latest research report titled SBI EcoWrap showed that the traditional way of gauging the distress in the rural economy is no longer relevant. The SBI EcoWrap report took Zomato as the case study to establish that the rural economy is not grappling with economic distress. 

While establishing the case for it, the SBI EcoWrap report said, “ Zomato has a market share of more than 50 per cent in the Indian food delivery market catering to more than 750 cities currently and hence a perfect example of a case study to refute the claim that people are facing distress.”

The report mentioned that as per Zomato, it is serving almost 1.4 crore active users in Metro, Urban, and Semi-Urban areas. “We estimate that around 0.44 crore active users are from Semi-urban regions only,” the report added. 

The report went on to add that the average order size is around Rs 400 per user as indicated in Zomato AR indicating that there is a clear indication of rising experience-centric income groups transcending conventional boundaries (and, wisdom too!) 

“Almost 2 crore family members (assuming 4 family members per 0.44 crore active users) are actively using Zomato from purely Semi-Urban areas,” the report stated. 

Two Wheeler Sale

According to the report, there have often been arguments that position and pitch the sale of two-wheelers as a proxy of rural/agrarian economy, in particular, lower numbers used to overtly suggest underlying all-encompassing duress in Bharat.

Based on data from SIAM, Indian 2-wheeler sales reached their zenith in FY 2019, clocking overall sales of 2.12 crore units (2.02 crore units in the preceding FY2018), ironically a year when agri GDP growth was at its recent bottom of 2.1 per cent. 

“Rainfall was deficient by a whopping 14 per cent that should have debunked the fallacious theory of two-wheeler sales only mirroring the state of the rural economy,” the report added further. 

However, the report argues that sales of 2-wheelers sales were lower owing to the ‘hygiene factor’. The report added that affluent families have skewed their preference in alignment with the ‘hygiene factor’ playing a pivotal role thus preferring cars.

“It is foolhardy to claim that declining two-wheeler sales are a proxy for distress in the rural economy. Agricultural tractor sales indeed have been robust even during the pandemic shocks and are on a continuous uptrend,” SBI EcoWrap added further.  

The research by RBI showed that two-wheeler sales are on a downward trend and passenger vehicle (4-wheeler) sales were on an upward trend even before the pandemic, but from FY19 onwards, there has been a clear preference for 4-wheeler over 2-wheeler.